Financing is the first and final word on solar projects. And in these straitened economic times, one company in San Francisco’s Bay Area is aiming to spark a rooftop solar revolution–one tile at a time.
Solar Mosaic, based in Berkeley, will this week unveil its pilot community PV program in neighboring Oakland. Instead of turning to expensive lending rates at major banks, Solar Mosaic’s financing adopts a crowd-sourcing model through the sale of “tiles,” each worth $100.
Creative solutions to the financing problems in PV are proliferating, such as Sungevity’s solar leasing options, or PsomasFMG’s model for public sector buildings such as schools, which cannot directly raise private finance themselves. But Solar Mosaic is one of a kind–for now.
The Business Model
Its first project already has $300,000 in the kitty to finance a rooftop in Chinatown in Oakland. There are plans for a few more such projects in Oakland, but after that the company aims to help investors make a return. Solar Mosaic currently charges a 10% fee on all tiles sold on the platform and will soon begin selling leads to residential solar developers.
After registration with the Securities and Exchange Commission, the company plans to make money by charging a closing fee of 5% to solar project owners and a 1.5% servicing fee to investors.
Phase one is about doing good, said Solar Mosaic’s chief executive, Dan Rosen. Phase two is about making money, or as the company slogan puts it creating prosperity through solar.
“Solar Mosaic is revolutionizing the way solar projects are financed and developed. Costs are often prohibitive or financed by the banks and utilities,” Rosen said.
“We’re opening it up and building an online marketplace where anyone can invest in solar projects.
“Our goal is to disrupt the two largest industries on the planet of energy and finance.”
“What we’re doing is peer to peer where people can invest in their local solar projects in their communities. We’re going to be the Lending Club of solar where people can invest in someone else’s solar project and make money,” Rosen said.
Rosen, who is 25 years old, launched the business while being trained at various young entrepreneurial programs, including the Unreasonable Institute in Boulder, Colorado and the PresenTense Global Summer Institute in Jerusalem, Israel. His projects are part of a growing trend of young innovators who are stepping into the energy industry with often more consumer-friendly business models.
Crowdsourcing Solar Finance
Bank financing for solar leases can be expensive. But Solar Mosaic’s crowdsourcing reduces risk for investors while tapping into new markets, according to Rosen.
“Once we’re able to offer a return in the next year people will get excited and want to put money into their community and create solar and make an investment. We’re hearing tremendous feedback. I can make money and do good. It’ll also allow more developers to reach markets they haven’t been able to reach yet.”
Backed by serious investors such as Spring Ventures of LinkedIn and Solazyme success and Europe’s star clean energy investor, Dr Alexander Voigt, who founded solar developer Solon and PV manufacturer QCells, Rosen has plans way beyond San Francisco’s east bay.
“Our European investors saw the huge opportunity of what we’re doing in America and also saw the scale possible in Europe. We want to be a global company,” Rosen said. “They see the potential in Europe to take on this model and grow–what we’re doing is so scalable buying solar panels, leasing it and getting paid back.”
Its board of advisors also features some solar heavyweights: Alex Guettel from Sungevity, Jigar Shah, founder of SunEdison and Van Jones of Rebuild the Dream.
The solar industry has been one of the renewable energy sector’s most active in recent months, but as prices for panels slip and government incentives fade against the backdrop of debt challenges, the industry is facing an uncertain future. Check out Breaking Energy’s coverage of the solar industry here.